Markets Experience Dramatic Comeback in April from First-Quarter Drop

​The effects of the novel coronavirus have continued to disrupt financial markets worldwide. Uncertainty over how long the pandemic will last has kept markets in flux, with the CBOE Volatility Index (VIX) averaging 41.45 points in April, which is down from March’s average but significantly greater than the 2019 average of 15.39 points. Moreover, unprecedented activity in oil markets added more context to the possible depth of the economic slowdown. However, during the month, markets seemed to rebound from a major pullback in the first quarter, with three of the four major indices growing by double-digit percentages. 

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• During an address to the nation on Tuesday, April 1, President Trump warned the country to brace for a “very tough two weeks ahead,” after White House data came out showing pandemic deaths could total 100,000 to 240,000 despite social distancing measures. This sent the S&P 500, Dow Jones Industrial Average, and Russell 2000 indices down 5.94%, 6.20%, and 7.45%, respectively, during the following Tuesday.
• Seemingly positive news regarding the novel coronavirus significantly lifted US equity indices on Monday, April 6. On the prior Thursday, Friday, and Saturday, the number of new coronavirus cases were 30,000, 32,100, and 33,300 on each day, respectively. However, on Sunday and Monday daily new cases fell to 28,200 and 30,331, respectively, giving some hope to Americans and investors alike. Even President Trump reported that the lockdown may end earlier than expected. Three of the four major indices, the S&P 500, Dow Jones, and Nasdaq, gained over 7%, while the Russell 2000 topped 8.2%.
• Oil prices closed in negative territory on Monday, April 20, sending US equities lower Monday and Tuesday. Prior surplus in the oil market has been exacerbated by reduced economic and transportation activity worldwide, leaving oil suppliers with a lack of physical storage space for new oil. This has led these suppliers to be willing to pay oil traders to accept delivery and find storage themselves. Regardless, the lack of demand for petroleum, signals to equity investors the extent and potential of the current economic crisis.

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The IPO Market Experiences Muted Change in Activity Compared with One Month Before

As mentioned previously, coronavirus-related market volatility has continued to spook corporations looking to list publicly. Compared with March, the number of new listings in April nearly doubled from five to nine, while the level of total funds raised slid slightly from $2.4 billion to $2.2 billion. Year-to-date, $1.2 billion less has been raised and one-quarter fewer firms have been listed compared to the same period in 2019. Five of the nine IPOs listed year-to-date were for special purpose entities who have been raising funds for acquisitions or special partnerships, three of the nine were healthcare firms going public, and the ninth firm was WiMi Hologram Cloud Inc., a developer of augmented-reality holographic products and services.